Banks’ losses pull U.S. mar­kets down from record highs

Austin American-Statesman - - COMMUNITY NEWS -

U.S. stocks fin­ished lower Mon­day for the sec­ond time in the last three trad­ing days. Banks gave back some of their re­cent gains af­ter a jump in in­ter­est rates last week sent them sharply higher.

Min­ing and chem­i­cal com­pa­nies de­clined af­ter China cut its eco­nomic growth fore­cast, and air­lines slumped af­ter a Delta said its busi­ness isn’t im­prov­ing as fast as it hoped. There were few win­ners to be found on Wall Street as more than twothirds of the stocks on the New York Stock Ex­change fell. That in­cluded con­sis­tent losses for banks, in­vest­ment firms and in­surance com­pa­nies.

The Stan­dard & Poor’s 500 index fell 7.81 points, or 0.3 per­cent, to 2,375.31. The Dow Jones in­dus­trial av­er­age lost 51.37 points, or 0.2 per­cent, to 20,954.34. The Nasdaq com­pos­ite lost 21.57 points, or 0.4 per­cent, to 5,849.18. The Rus­sell 2000 index of smaller-com­pany stocks sank 9.88 points, or 0.7 per­cent, to 1,384.25.

All four in­dexes reached all-time highs last week, and the S&P 500 and Nasdaq have risen for six weeks in a row. That’s on top of a big surge in Novem­ber and De­cem­ber. Those rapid gains the last few months have prompted some an­a­lysts to turn cau­tious.

“We think there’s a rea­son­able chance at the end of the year we’ll be a lit­tle bit lower than we are right now,” said Scott Wren, se­nior global eq­uity strate­gist at Wells Fargo In­vest­ment In­sti­tute.

Over the week­end, Premier Li Ke­qiang, China’s top eco­nomic of­fi­cial, trimmed the coun­try’s growth tar­get to 6.5 per­cent. The Chi­nese econ­omy is the sec­ond-largest in the world, and the prospect of slower growth there hurt min­ing, pack­ag­ing and chem­i­cal com­pa­nies and sent the price of cop­per lower.

But in­vestors weren’t nearly as alarmed about the lat­est signs of slow­ing growth in China as they were in the past. Stocks plunged in early 2016 as in­vestors wor­ried the Chi­nese econ­omy might weaken in a hurry and drag the global econ­omy down with it. Wren said Wall Street now thinks growth in China will slow down grad­u­ally.

Delta Air Lines gave a dis­ap­point­ing rev­enue pro­jec­tion for the sec­ond quar­ter and its stock lost $1.28, or 2.6 per­cent, to $48.85. United and Amer­i­can Air­lines each fell 3 per­cent.

Poul­try com­pa­nies slumped af­ter a bird flu out­break was dis­cov­ered in Ten­nessee. The af­fected farm is a sup­plier to Tyson Foods, and while Tyson said it doesn’t expect its busi­ness to suf­fer, the new brought back bad mem­o­ries for in­vestors: in 2015, U.S. poul­try pro­duc­ers lost 48 mil­lion birds to a dif­fer­ent strain of the virus.

French au­tomaker PSA Group agreed to buy Gen­eral Mo­tors’ Euro­pean busi­ness, which has lost $20 bil­lion since 1999 and hasn’t made an an­nual profit over that span.

In­vestors were glad to see it go, as GM’s stock jumped al­most 5 per­cent when the talks were dis­closed last month. PSA makes Peu­geot and Citroen cars, and the ad­di­tion of the Opel and Vaux­hall brands will make it the sec­ond-largest au­tomaker in Europe. Its stock rose 2.7 per­cent.

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